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The Central Bank of Iran is reportedly working with the Russian government to jointly launch a new cryptocurrency backed by gold.

According to the Russian news agency Vedomosti, Iran is working with Russia to create a “Gulf region token” that will serve as a payment method for foreign trade.

The token is planned to be issued as a stable coin backed by gold, said Alexander Brazhnikov, executive director of the Russian Association of Crypto Industry and Blockchain.

The purpose of the stablecoin is to enable cross-border transactions to exchange fiat currencies such as the US dollar, Russian ruble or Iranian rial. The report notes that the potential cryptocurrency will operate in the Astrakhan Special Economic Zone, where Russia has begun accepting Iranian cargo.

Anton Tkachev, a Russian lawmaker and a member of the Information Policy, Information Technologies and Communications Committee, emphasized that the joint stablecoin project will be possible only when the digital asset market in Russia is fully regulated. After numerous delays, the lower house of the Russian parliament has once again promised to start regulating crypto transactions in 2023.

Iran and Russia are among the countries that have banned their residents from using cryptocurrencies like Bitcoin (BTC) and stablecoins like Tether (USDT) for payments. Meanwhile, Iran and Russia are actively working to adopt crypto as a foreign trade tool.

Related to: Russia will begin working on a CBDC settlement system while sanctions remain in place

In August 2022, Iran’s Ministry of Industry, Mines and Trade approved the use of cryptocurrency for imports into the country amid ongoing international trade sanctions. The local government said the new measures would help Iran ease global trade sanctions. Iran then placed its first international import order using $10 million worth of crypto.

The Bank of Russia, which has historically opposed the use of crypto as a payment method, has agreed to allow crypto in foreign trade to mitigate the impact of international sanctions. The regulator has never clarified which cryptocurrencies will be used for such transactions.